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TMI Blog2019 (6) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs. 1,76,513/-. 4. The appellant craves leave for reserving the right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The brief facts of the case are that assessee filed its return of income declaring Rs. 42,48,000/- on 07.09.2012. The case of the assessee was selected for scrutiny under CASS and a notice u/s. 143(2) of the Income Tax Act, 1961 (in short "Act") dated 06.8.2013 was issued. Questionnaire dated 08.5.2014 was issued to the assessee alongwith the notice u/s. 142(1) of the Act. In response to the notice, the AR of the assessee attended the proceedings. AO observed that on perusal of the Balance Sheet for the year under consideration, it was noted that the assessee company had received a total amount of Rs. 6,00,00,000/- on account of issue of share capital of Rs. 60,00,000/- and share premium of Rs. 5,40,00,000/-. Accordingly, the AO vide order sheet entry dated 29.12.2014, has asked from the assessee's AR to justify the receipt of share capital and share premium money during AY 2012-13 alongwith identity, genuineness of transaction and creditworthiness of the subscribers of company's sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reiterated the contents raised in the grounds of appeal. He submitted that Ld. CIT(A) has wrongly deleted the addition u/s. 68 of the Act without appreciating the fact that the assessee failed to prove the creditworthiness of the shareholders who have invested in the Company. He further submitted that one of the Directors of the assessee company, Sh. Satish Kumar Gupta, who appeared was not completely aware of the details of transactions with these companies. It was further submitted that the other Director Sh. Naval Kishor Gupta did not appear in response to summons u/s. 131 of the Act. He further stated that assessee was not cooperative and has not been able to establish the genuineness of the share capital. Therefore, the AO has made a reference to the decisions of the Hon'ble Delhi High Court in the case of NR Portfoloi Pvt. Ltd., Nova Promoters and Finlease Pvt. Ltd. and Nipun Builders and Developers Pvt. Ltd. and rightly made the addition of Rs. 6,00,00,000/- u/s. 68 of the Act, which does not need any interference and accordingly requested to cancel the Ld. CIT(A) order on this issue and allow the ground raised by the Revenue. He further submitted that during the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 435 (SC). - Hon'ble Bombay High Court decision dated 26.3.2019 in the case of Pr. CIT vs. Aditya Birla Telecom Ltd. in ITA no. 1502 of 2016. - ITAT, B Bench, New Delhi decision dated 24.5.2019 in the case of ITO vs. Computer Home Information Plus Pvt. Ltd. in ITA No. 5680/Del/2016 (AY 2012-13) - ITAT, A Bench, New Delhi decision dated 31.5.2019 in the case of ITO vs. Ambika Metalchem Impex P. Ltd. in ITA no. 1676/Mum/2017 (AY 2009-10). 5. We have heard both the parties and perused the records especially the orders of the revenue authorities; Paper Book filed by the Assessee's AR as well as the case laws cited by the parties. As regards ground no. 1 & 2 which are relating to deletion of addition of Rs. 6,00,00,000/- u/s. 68 of the Act on account of share capital is concerned, we note that the Assessing Officer issued notices u/s 133(6) of the Act to the share applicants on 16.02.2015 which were returned un-served and even in response to summons u/s 131 of the Act, the shareholder companies had not appeared for personal deposition. The AO observed that one of the Directors of the assessee company, Shri Satish Kumar Gupta, who appeared was not completely aware of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the Assessing Officer after noting the facts, merely rejected the same. This would be apparent from the observations of the Assessing Officer in the assessment order to the following effect Investigation made by the Investigation Wing of the department clearly showed that was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was Rs. 55,50,000/- and not Rs. 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in of the parties mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court further Observed that case the investor, shareholder is an individual, some documents will have to be filed or the said shareholder will have to be produced before the Assessing Officer proves his identity. If the creditor / subscriber is a company then the details in the form of resolution r PAN identity, etc can be furnished. As regards the genuineness of the transaction to be demonstrated, the Court held that by showing that the assessee had in fact received money from the said shareholder and the money came from the corpus of that very shareholder the genuineness was duly established. The Division Bench also held that when the money is renewed by cheque and is transacted through banking or other undisputable channel, the genuineness of the transaction would be proved. Other documents showing the genuineness of transaction could be copies of the shareholders register, share application forms share transfer renter, etc. As far as creditworthiness or the financial strength of the creditor or subscriber is s concerned, that can be proved by producing bank statement of the creditor / subscribers showing that it had sufficient balance its account to enable it to subscribe to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the documents submitted by the assessee. If that be the case, the Assessing Officer cannot make addition under Section 68 in the hands of the appellant company. The assessee company has been able to prove its case and in case the assessee has failed to produce the shareholders, as held by the jurisdictional High Court in the case cited above, the Assessing Officer cannot shift the burden on the assessee company. In case the Assessing Officer had any doubt about the shareholders, nothing stopped him from taking appropriate action or proceeding against these shareholders. It is a case where the assessee has been able to meet the requirements to justify its case. If the notices issued by the A.O. to the share subscribers were not complied with or came back unserved, this could not be held against the assessee, which had discharged the initial onus which lay upon it by proving the identity of the share applicants and the genuineness of the transactions. This principle has been laid down in the case of C.I.T. vs. Orissa Corporation Pvt. Ltd., [1986] 159ITR 78 (SC), wherein it was held as follows:- "In this case, the assessee had given the names and addresses of the alleged credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer in his assessment order. In our considered view, we do not find any parity in the facts of the decisions relied upon by the Ld. Sr. DR of the Department with the peculiar facts of the case in hand. 7. As regards ground no. 3 which is relating to deletion of addition of Rs. 1,76,513/- made u/s. 14A of the At read with Rule 8D of the I.T. Rules is concerned, we note that during the year, the assessee company has shown investment in equity instruments of Rs. 5,26,81,405/- and vide order sheet entry dated 29.12.2014, the AR of the assessee company was asked to justify applicability of Section 14A r.w.r. 8D and in response to the same assessee company vide letter dated 13.1.2014 has submitted that the assessee company made investment in shares amounting to Rs. 5.27 crores and the company had not earned any dividend income during the year, hence, the provisions of section 14A are not applicable on the Co. However, AO by placing various case laws and the CBDT Instructions, has held that the expenses related to exempt income are to be disallowed u/s. 14A in accordance with Rule 8D of the I.T. Rules and made the addition of Rs. 1,76,513/- u/s. 14A of the Act. For the sake of co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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